Exaclty, I also read it and I got it how it should work. It doesn't make sense to me that it doesn't work with MF lenses. But I've just tested another MF lens (so three in total) and same behavior.
Works correctly with AF lenses.
Would be great if someone else could test the option "Interlock MF assist & Focus ring" on the X-T50 with a manual lens in order to understand if it is correct it only works with AF lenses or if my camera has a bug